Good Plan!! Republican Paul Ryan's budget proposal is brave, radical, and smart.

Good Plan! 

Republican Paul Ryan's budget proposal is brave, radical, and smart

By Jacob Weisberg  -  Posted Tuesday, April 5, 2011, at 6:09 PM ET

For the past 30 years, Republicans have been hypocrites about spending. They've raged against big government without ever proposing the kinds of cuts necessary to bring federal expenditures in line with tax revenues. Democrats have been more fiscally responsible, producing an actual budget surplus during Bill Clinton's second term. But they've been little better than Republicans when it comes to confronting the nation's long-term fiscal imbalance, which is driven by the projected growth in entitlement spending.

Rep. Paul Ryan holds a copy of the 2012 Republican budget proposal This dynamic of political evasion and reality-denial may have undergone a fundamental shift today with the release of Rep. Paul Ryan's 2012 budget resolution. The Wisconsin Republican's genuinely radical plan goes where Ronald Reagan and Newt Gingrich never did by terminating the entitlement status of Medicare and Medicaid. (It doesn't touch the third major entitlement, Social Security, though Ryan has elsewhere argued for extending its life by gradually raising the retirement age to 70.) Ryan changes Medicare into a voucher, which would be used to purchase private health insurance. He turns Medicaid into a block grant for states to spend as they choose. Though his budget committee isn't responsible for taxes, Ryan includes the boldest tax reform proposal since the 1980s, proposing to lower top individual and corporate rates to 25 percent and end deductions. While he's at it, Ryan caps domestic spending, repeals Obamacare, slashes farm subsidies, and more.

If the GOP gets behind his proposals in a serious way, it will become for the first time in modern memory an intellectually serious party—one with a coherent vision to match its rhetoric of limited government. Democrats are within their rights to point out the negative effects of Ryan's proposed cuts on future retirees, working families, and the poor. He was not specific about many of his cuts, and Democrats have a political opportunity in filling in the blanks. But the ball is now in their court, and it will be hard to take them seriously if they don't respond with their own alternative path to debt reduction and long-term solvency.

And before they reject everything in Ryan's plan, liberals might want to consider whether some of what he proposes doesn't in fact serve their own ultimate goals. Ryan's proposal to turn Medicare into a voucher provides an easy political target. But it's hard to make a principled liberal case for the program in its current form. To do so, you have to argue that government-paid health care should be a right only for people over the age of 65, and for no one else. Medicare covers doctor and hospital bills at 100 percent, regardless of income. This gives doctors and patients an incentive to maximize their use of the system and waste public resources. Choosing to pay 100 percent of Warren Buffett's medical bills while cutting Head Start reflects a strange set of social priorities, to say the least.

Ryan's alternative to Medicare hardly seems as terrible as Paul Krugman makes out. Seniors would enter the health care world the rest of us live in, with co-payments, deductibles and managed care. Eventually, cost control would require some tough decisions about end-of-life care and the rationing of high-tech treatments that have limited efficacy. But starting with a value of $15,000 per year, per senior—the amount government now spends on Medicare—Ryan's vouchers should provide excellent coverage. His change would amount to a minor amendment to the social contract, not a fundamental revision of it.

Effectively constraining the growth of Medicare could make it possible for Democrats to do a lot else that's important to them in the future. In 2010, Medicare spending was $519 billion, as compared with $666 billion for all nondefense domestic discretionary spending. Growing at more than 7 percent a year, Medicare is projected to eventually consume nearly all federal tax revenues. It is crowding out everything else that Washington does or might want to do. Conversely, cutting Medicare's growth rate to near the overall rate of the economy would do more than anything else to enable the kind of activist government liberals support—investment in kids, education, jobs, and infrastructure. Ryan's goal isn't to empower the federal government. But if your goal is a more interventionist public sector, you might find yourself on Ryan's side of the Medicare debate.

Of the alternatives we face in controlling long-term spending growth, moving Medicare to a voucher system seems only mildly unfortunate—and nothing as compared with a debt-driven economic crisis that could stem from inaction. As Ryan rightly points out, this kind of crisis could come at any time and could cast a pall over the country's entire future. Keeping Medicare as a fee-for-service program simply isn't worth that risk. If anything, liberals should go further than Ryan did in this plan, adding a means-test that would diminish Medicare subsidies for upper-income beneficiaries.

There are, of course, some sleight-of-hand tricks in Ryan's plan. What he claims would restore fiscal balance would do nothing of the kind over the next decade, leaving $400 billion in annual deficits as far as the eye can see. That's because he slips a large tax cut into his "reform," leaving government revenues perpetually two percentage points lower than spending expenditures as a share of GDP. What's needed is not more tax cuts but a modest tax increase, of the kind the Simpson-Bowles fiscal commission proposed. That failure is easily remedied, however, by adopting a top rate higher than the 25 percent he proposes, though still lower than the current 35 percent level.

Ryan also evades a lot of difficult particulars. He seldom spells out domestic spending cuts, preferring to kick the can down the road by applying "caps." He skirts the question of which deductions and tax subsidies he'd eliminate to pay for these lower rates. Unfortunately, you don't get big savings unless you eliminate mortgage interest and charitable deductions, which would be politically unpopular. Ryan includes the Heritage Foundation's projections about job growth triggered by his plan—4 percent unemployment in 2015 vs. 5.9 percent without the plan—that are a supply-side fantasy. His anti-bailout rhetoric is silly pandering. I could go on.

But more than anyone else in politics, Rep. Ryan has made a serious attempt to grapple with the long-term fiscal issue the country faces. He has a largely coherent, workable set of answers. If you don't like them, now you need to come up with something better.

Slate

Video:  Explaining Paul Ryan’s Budget Plan

But before we can even get to this budget proposal and the debt ceiling the present House and Senate have to come to an agreement on the budget that Nancy Pelosi, Harry Reid and President Obama pushed off into this year. They didn’t do their jobs to help themselves in the 2010 elections and now they are fighting the will of the people to cut spending which was the 2010 mandate and are trying to delay to make the GOP look like they are the bad guys and shut down the government… when they are only doing what they were elected to do… by the people.  Don’t buy into the smoke and mirrors of Reid, Pelosi and Obama.  That is how we got here.

And as usual, all of a sudden in the last hours Obama is looking concerned…

GOP CHICKEN RUN FATAL

If House Republicans accept a "compromise" of less than $61 billion in budget cuts, it will demonstrate that they will never really make good on their sole bargaining chip -- a government shutdown. If they don't do it over the continuing resolution (CR), they won't do it over the debt limit or the 2012 budget.

If the Republicans in the House accede to Democratic and administration demands that they accept a lesser figure in budget cuts, they will throw away all their power and be revealed as toothless and impotent, though still noisy. In this one act, they will throw away the victory of 2010.

And there is no need to cave in! The prospect of a government shutdown is not the only alternative. A targeted shutdown, which zero-funds programs we want to go away anyway and which the public will never miss, is the real option.

Don't shut down the government. Shut down the State Department and the Agency for International Development. Alone, that would generate the $61 billion in cuts. Zero-fund PBS and the Endowment for the Arts and Humanities. Zero-fund the Bonds for America Program ($12 billion). Zero-fund the stimulus programs for infrastructure construction and repair.

Senate Democrats and the Obama administration will not dare shut down the rest of the government in retaliation. If they do, the entire fight will be posed as: Do we want to eliminate foreign aid, or shut down the entire federal government to save it?

Once the Republicans win the fight in principle, they can back off the zero-funding and negotiate a CR that makes more sense and spreads the cuts more widely but still totals $61 billion. But during the shutdown phase, the shutdown must be targeted at agencies that have no popularity or domestic constituency.

Once Senate Majority Leader Harry Reid (D-Nev.) and President Obama realize that House Republicans won't pull the trigger on a government shutdown (entire or targeted), there is no reason for them to negotiate seriously with the House. The GOP's leverage will evaporate, and its capacity to fulfill any of its campaign promises will have been vitiated.

Are the Democrats seriously to believe that House Republicans will kill the debt-limit increase if their demands are not met or will close the government on Oct. 1 if their budget is not adopted? Once the House Republicans back off on the CR, there is no way they can be taken seriously.

For Speaker John Boehner (Ohio), Majority Leader Eric Cantor (Va.), Budget Committee Chairman Paul Ryan (Wis.) and Appropriations Committee Chairman Hal Rogers (Ky.), the stakes are their credibility within their own conference. The Tea Party Republicans and most of the freshmen are not going to support retreat from the $61 billion in cuts. They will be sustained by a massive outpouring of opposition to any compromise by their ground troops. By trying to do Harry Reid's work and jamming a compromise down the throats of the freshmen and Tea Party Republicans, Boehner, Cantor, Ryan and Rogers all risk a profound division in the party. In effect, they will be announcing a kind of coalition majority in the House, discarding the leftist Democrats and the Tea Party Republicans with equal disdain. The Republican House campaigns of 2012 will be riddled with primary contests and much of the establishment of the party will be swept from office in a sea of anger and outrage at their failure to keep their promises.

Any Republican who votes to compromise on the $61 billion is inviting a primary fight -- one in which I will happily participate. We elected the House Republicans to stand firm. We put them in office not to cave in. And now, we will find out what they are made of.

Dick Morris  - Former Advisor to Bill Clinton and author of: Revolt!  -  Published on TheHill.com on April 5, 2011